Starting May 5, the Department of Education will resume mandatory collections for approximately 5 million Americans who have defaulted on their student loans. This announcement signals the end of the pandemic-related pause on such collections, which provided relief to borrowers during economic uncertainty.
Defaulted student loans are subject to various collection activities, including wage garnishment, tax refund offsets, and negative impacts on credit scores. Borrowers facing collections are urged to explore options such as loan rehabilitation, which allows them to bring their loans back into good standing after making a series of on-time payments. Loan consolidation is another avenue, enabling borrowers to combine multiple loans into a single, more manageable loan with potentially lower interest rates or different repayment terms.
The resumption of collections is expected to have a significant impact on the financial lives of affected individuals and families. Experts recommend borrowers contact their loan servicers as soon as possible to understand their options and avoid further penalties. Resources and information are also available on the Department of Education's website.
Student Loan Collections to Resume for Millions on May 5
The Department of Education has announced that mandatory collections will restart on May 5 for roughly 5 million Americans with defaulted student loans. This marks the end of the pandemic-era pause on collections for these borrowers. Experts recommend borrowers explore options like loan rehabilitation or consolidation to avoid wage garnishment and other collection actions. The resumption of collections could significantly impact the financial stability of affected individuals and families.
Source: Read the original article at ABC